| Item 1.01 | Entry into a Material Definitive Agreement. |
Master Repurchase Agreement and Securities Contract
On November 10, 2022, FS CREIT Finance NTX-1 LLC (“NTX-1”), an indirect wholly owned special-purpose financing subsidiary of FS Credit Real Estate Income Trust, Inc. (“FS CREIT”), entered into a Master Repurchase Agreement and Securities Contract (the “Repurchase Agreement,” and together with the related transaction documents, the “Facility”), as seller, with Natixis, New York Branch, as buyer (the “Buyer”), to finance the acquisition and origination of (i) whole, performing mortgage loans and mortgage notes secured by a first lien on multifamily, retail, office, hotel, self-storage or industrial property or mixed-use property and (ii) pari passu participation interests in such performing mortgage loans (collectively, “Eligible Assets”).
The Facility is uncommitted, so the Buyer has no obligation to enter into a transaction under the Facility to finance Eligible Assets. The initial maximum amount of financing available under the Facility is $187.5 million. Buyer may elect to increase the maximum amount of financing available to no more than $250 million in its discretion.
The initial availability period of the Facility (during which financing under the Facility may be used for acquisition and origination of new assets) is two years. NTX-1 may request to extend the availability period for a one-year term extension, so long as certain conditions are met.
In connection with the Repurchase Agreement, FS CREIT entered into a Guaranty (the “Guaranty”) pursuant to which FS CREIT guarantees 25% of NTX-1’s obligations under the Repurchase Agreement, subject to limitations specified therein. The Guarantee may become full recourse to FS CREIT upon the occurrence of certain events, including willful bad acts by FS CREIT or NTX-1.
The Repurchase Agreement and Guaranty contain representations, warranties, covenants, events of default and indemnities that are customary for agreements of their type. In addition, FS CREIT is required (i) to maintain its adjusted tangible net worth at an amount not less than 75% of the net cash proceeds of any equity issuance by FS CREIT minus 75% of the amounts expended for equity redemptions or repurchases by FS CREIT; (ii) to maintain an EBITDA to interest expense ratio not less than 1.50 to 1.00; (iii) to maintain a total indebtedness to tangible net worth ratio of less than 3.50 to 1.00; and (iv) to maintain minimum liquidity plus net available capital commitments at not less than the greater of (x) $15,000,000 and (y) 5% of the amount outstanding under the Facility.
Each transaction under the Facility to finance Eligible Assets will have its own specific terms, such as identification of the assets subject to the transaction, sale price, repurchase price and rate. In addition, any term of the Facility or the Guaranty may be amended in connection with any transaction.
The material terms of the agreements described above are qualified in their entirety by the agreement attached as Exhibits 2.1 and 2.2 to this Current Report on Form 8-K and incorporated herein by reference.
| Item 2.03 | Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant. |
The information contained in Item 1.01 of this Current Report on Form 8-K is incorporated by reference into this Item 2.03.
